Heavyweight brick-and-mortar retailers, with their deep
pockets, stand the best chance of weathering the current e-tail purge, but
some of them could discover it's not worth the trouble.

Powerhouses such as Walt Disney, Hollywood Entertainment and Levi Strauss have eased themselves out of the e-tail game after their online stores foundered.
Stalwart retailers such as Wal-Mart, Staples and Sears, Roebuck have invested big
money in their Net divisions, and all have yet to show a profit.

The latest example of a large, traditional retailer marching toward the
e-commerce sidelines is Toys "R" Us. The nation's largest toy merchant
turned over most of its Web operations to Amazon.com when the two companies
agreed to create a co-branded Web site, they announced last week.

"Nobody has come up with the absolute perfect formula to sell online," said
Toys "R" Us spokeswoman Rebecca Caruso. "But we are committed to selling
online. Toys 'R' Us and Amazon will be everywhere our customers are."

With pure online companies driven out of business daily during the ongoing
shakeout and large retailers struggling to sell goods online, some
analysts say that it appears the Internet has fallen far short of the
blockbuster buying tool investors and analysts once predicted it would be.

In Toys "R" Us' case, the nation's leading toy retailer abruptly halted
beefing up its Web operations just three months before the holiday season
and handed them over to Amazon for the next decade.

"What it came down to is that they weren't seeing the kind of buying online
that they had anticipated," said a source close to Softbank, the venture
capital firm that invested $57 million in Toys "R" Us in February.

"They found that people were using the Net to browse or to buy small-ticket
gifts for other people's children," the source said. "When it came to buying
for their own kids, which is when most big-ticket toys are bought, most
people chose to shop in land-based stores."

After crunching the numbers, Toys "R" Us also discovered that the cost of
dominating the online toy business may not be worth the trouble.

"They figured (their expansion plan) would take too long to pay for
itself," the source said.

Controlling costs has become paramount at Toys "R" Us, as the company
struggles to retake the top spot in toy sales from Wal-Mart. On Monday, the
Paramus, N.J.-based company released second-quarter earnings and said that
fiscal second-quarter profit fell 75 percent on declining sales in its U.S. stores
and losses at its Internet division.

Toysrus.com chief executive John Barbour said during an exclusive interview
Monday with CNET News.com that the partnership with Amazon was formed because it made sense.

"We've looked at Amazon as a role model since I came here," Barbour said.
"There is no one that runs a tighter, more organized online business. What
we've done is matched the world's best e-commerce store with the world's
best toy store."

Under the terms of the 10-year agreement, the companies will create a Web site for toys and video games. The deal calls for each company to play to its strengths. Amazon will oversee site
development, order fulfillment and customer service for the new site, while Toysrus.com will manage merchandising and inventory.

Toys "R" Us steamed into the new year saying it would spend big to ensure
that the mistakes of last holiday season were not repeated.

Over and over again, Toysrus.com appeared to trip over its feet as it
stepped online. The company's costliest gaffe came when it informed
customers days before Christmas that it wouldn't be able to deliver some
goods until after the holiday.

Some customers affected by the shipping delays filed a class-action lawsuit
and as a result, the Federal Trade Commission fined Toysrus.com more than $300,000 last month.

A week before the deal with Amazon was announced, Toysrus.com was hit with a new class-action lawsuit that alleges the company shared customer
data obtained from its Web site with market researchers, something it
promised in a written statement never to do. Toysrus.com has denied the
charges.

Barbour said the recent controversies have nothing to do with the
decision to partner with Amazon. He also rejected the idea that Toys "R" Us
has given up on its Net operations or that its role has diminished.

"We have the expertise in buying and, together with Amazon's Web expertise,
we have the opportunity to create the world's best online shopping
experience."